Senegal IMF loan puts debt treatment in focus

Senegal's $2.2 billion staff-level loan agreement with the International Monetary Fund has put the country's debt treatment plan at the centre of its economic and political debate.

The three-year agreement, reached earlier this week, still needs approval from the IMF's executive board. That is expected at or before the IMF annual meetings in October, when more programme details are due to emerge.

The deal follows the suspension of a previous $1.8 billion IMF programme agreed in 2023 after previously unreported debt was discovered under the former administration. The IMF estimated Senegal's total public-sector debt at 132 percent of GDP at the end of 2024.

Economists said the new loan is smaller than Senegal's financing needs but could help unlock support from other creditors, donors, development banks and private investors. Amath Ndiaye, an economist and researcher at Cheikh Anta Diop University in Dakar, told AFP that the agreement's value lay less in the amount of money than in the confidence and leverage it could generate.

Senegal has confirmed it will implement an enhanced version of the G20 Common Framework, a mechanism set up in 2020 to help heavily indebted countries address debt burdens under conditions. The IMF has referred to Senegal's approach as “debt treatment”, while the government has used the term Senegal Debt Treatment Plan.

Robert Besseling, chief executive of Pangea-Risk, told AFP that the common framework amounted to restructuring, with the enhanced element likely referring to a faster process. Senegalese officials have avoided calling the plan traditional restructuring.

The issue is politically sensitive. Ousmane Sonko, the former prime minister who was dismissed by President Bassirou Diomaye Faye in May and now leads the Pastef-dominated National Assembly, has previously called debt restructuring a “disgrace”. Besseling said Sonko had since softened his tone and would not want to be blamed for deeper economic and financial instability.

Finance Minister Cheikh Diba said the agreement would create budget space for more social support and for paying debts owed to private companies. The programme is also set to restrict energy subsidies that help hold down electricity prices to families described as in need.

Abdoulaye Ndiaye, a Senegalese economist at New York University, told AFP that some ambiguity remained because reforms were not clearly defined in the agreement document. He said Senegal still had to mobilise funding with partners and decide how the reform framework would be implemented.

The IMF deal concerns external debt and not Senegal's CFA-denominated debt. Besseling said that meant the common framework was only part of the solution. Amath Ndiaye said excluding CFA debt was crucial to prevent a Senegalese sovereign debt problem from becoming a regional banking crisis.

The IMF said Senegal's economy grew 6.7 percent in 2025, driven by the first full year of oil production, while non-hydrocarbon GDP growth slowed to 2.2 percent. Senegal began production at its first offshore oil field in 2024.